In the Short Run, a Firm Which Has Production Function

question 14

Multiple Choice

In the short run, a firm which has production function f (L, M) = 4 must use 4 machines. If the cost of labor is $4 per unit and the cost of machines is $10 per unit, the short-run total cost of producing 72 units of output is

• A) $504.
• B) $288.
• C) $720.
• D) $728.
• E) $364.

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Definitions:

Real Interest Rates

The interest rate adjusted for inflation, reflecting the real cost of borrowing and the true return on savings.

Tax-exempt Interest Payments

Interest income that is not subject to federal income tax.

Riskier Loans

Loans that have a higher chance of default, often associated with higher interest rates to compensate for the increased risk.

Pure Rate

In finance, often refers to the interest rate or yield on a security that is devoid of any risk, representing the cost of borrowing without the influence of risk factors.